High hope for iPhone X sales fade
Apple's stock has backtracked from its recent highs amid mounting concerns that iPhone X sales will fall short of the high hopes for a device that brought facial recognition technology to the company's flagship product line.
Speculation about disappointing demand for the iPhone X have been swirling for the past week, contributing to a six per cent decline in Apple's stock since it hit an all-time high of $US180.10 on January 18.
The shares lost $US3.55 to close at $US167.96 on Monday, translating into a nearly $US60 billion loss in the company's market value since the stock last peaked.
Concrete evidence of how the iPhone X is faring should emerge on Thursday when Apple is scheduled to release its first-quarter earnings.
The period spans from October through December, covering the early November release of the iPhone X and the holiday shopping season that typically brings Apple's biggest iPhone sales of the year.
For now, many investors appear to be focusing on analyst comments and media reports that Apple is dramatically reducing its iPhone X orders with its suppliers.
JP Morgan analyst Narci Chang said last week that manufacturing of Apple's flagship phone could be cut in half during the first three months of this year in reaction to weakening demand.
But RBC Capital Markets analyst Amit Daryanani believes Apple's reported iPhone sales during the past quarter will be higher than anticipated and the projections for the current quarter won't be as lacklustre as many people fear.
The iPhone X is unlike anything Apple has ever made in the product line's 10-year history.
It features an OLED screen that spans from one edge of the device to the other and displays images in more vibrant colours.
It also relies on technology that recognises a user's face to unlock the device and animate emoji's.
Investors have been counting on the iPhone X to be a huge hit, despite its unprecedented starting price of $US1,000.
Apple also released two other new models in September, the iPhone 8 and iPhone 8 Plus, which are similar to its 2016 models, but sell for 20 to 30 per cent less than the iPhone X.
Neither of those phones has the fancier display screen or facial recognition technology featured in the iPhone X.
Analysts, on average, estimate that Apple sold 79 million iPhones in the past quarter, generating revenue of $US60.1 billion, according to FactSet.
That translates into an average sales price of $US760 per iPhone, a 10 per cent increase from the same time in the previous year when Apple sold about 78 million iPhones at an average price of $US694.
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